The Economy Slumbers as Power Eludes Bangladesh

Have you ever tried explaining to non-economists what the consequences of resource misallocation can be for the economy?

What will happen if you invest enough in some sectors and too little in others? The answer is likely to be that you have enough production in sectors where you got your investments right and too little in the under-invested sectors. That may be correct in some cases, but it ignores the interdependence between the adequately invested and underinvested sectors. As a result, you may have too little production in the sectors where you have invested enough because you have too little production in the sectors you have neglected to invest.

Here is a real life example. Take a look at this photograph of a garment factory in Bangladesh. The workers are napping, the machines are silent, and the materials are unused. All the needed inputs to run the factory are right there. Yet they are useless because one critical input is missing—there is power outage. Bangladesh failed to invest enough in power generation while the rest of the economy boomed—manufacturing and construction in particular. The latter not only contributed to rapid income growth but also even faster growth in demand for power, which has now become the Achilles’ heel of the economy.

With power generation not growing even remotely as fast, this is now choking growth in the rest of the economy despite the fact that the latter have enough workers who are willing to do all the hard work and enough owners who have already installed the machines and procured the materials with which these workers can work to produce goods. The economy is missing out on boosting domestic incomes and fetching precious foreign exchange earnings.

The power crisis in Bangladesh is a tip of the iceberg hiding a much deeper crisis of decisiveness in Bangladesh’s polity. We cannot make up our mind on how to extract our coal reserves. We cannot make up our mind on how to explore gas on shore and off shore. We are taking too long on deciding how to implement the Memorandum of Understanding on energy sharing with India. Meanwhile, our machines will remain silent and our workers will continue to nap in their factories because of lack of electricity and spend sleepless nights at home, again because of lack of electricity. Speaking of reversing the daily life cycle!

Economists view “inefficiency” as a state of the economy in which you can actually or potentially make some people better off without hurting anyone else. The current power crisis in Bangladesh is a classic case of inefficiency. We have to act and act now.

Otherwise, we will continue wasting what Alfred Marshall characterized as the most scarce resource—time.

Comments

Many thanks for highlighting the problem part. Would appreciate shedding some lights on the solution aspect. How do you see the future of alternative energy sources in Bangladesh? What will make us work like there is no tomorrow if we dont fix our todays.
Thanks,
Sheikh M. Belal

Like the previous comment, I am also sincerely curious about the solution of this problem, as it relates to other South Asian Countries too.
Who owns that factory? private sector or the government?
Who normally is investing in energy production in Bangladesh? Private sector or Government?
If there is demand and supply can be profitable, not doing so defies logic.
I am not economist, so please bear my basic questions.

I think this is a case of uncordinated development plans. Driving other sectors and neglecting the power sector is almost meaningless.
This is also the case in my native country, Nigeria, where power situation is very erratic and have forced many budding entrepreneurs out of business, as they can hardly afford alternative energy sources. We need not go through the negative effects of this inefficiency on economic growth.
There is a need to wake up from this sort of inefficiencies if we (the developing economies) must achieve economic growth!!!

Bangladesh is a developing country and most serious challenges we faces is power crisis. What ever we forecast for demand but our calculation failed because if you produce right now 7000 megawatt, it will fulfill with in a very short time because of many development and industries are waiting for power. If power is available, we will see many new projects, industries will consume immediately.
In electricity, when we save power it means we produce power. If somebody save 100 watt, another user can use that power. Therefore energy efficiency is essential in every electric product. All the develop world even India also have energy efficiency authority to motivate and regulating energy efficiency policy.
Now, let’s see in which sector we can reduce use of energy and some policy to motivate the people.
1. Major energy use in industrial sector and there are inductive and non inductive load. In our country, there are no major rules or not applied properly the rules for machine use. Like many industry using motor and sometimes those motor are not efficient at all and may be it will be recondition or old enough to be an efficient motor. Most of the inductive load do not have soft starter. Even in general use of water pump, there are no standard efficient level for selecting pump. Therefore people using 2500 tk water pump and that same 1 hp pump, in good branded one will be 7500 or higher. But people choose low price one which will destroy power and less efficient.
Now what we can do about it? Must have regulation for import machine, motor not old enough 3 years if recondition. Motor or machine THD level, efficient must check. Soft starter should embed in every inductive device.
2. Regarding the Electric bike. It is very good for environment but as we cannot support the energy they need it is now harmful. First of all, that DC motor china made and worse efficient. Then using very low price batteries all together it is destroying good amount of power. Now if we calculate 250000 e bike, avg battery power (4 pc battery 100 amp to 165 amp) = 4800 watt to 7920 watt, to charge up that watt 250000 bike * 6300 avg; watt = 1575 megawatt. We cannot tell everyday they empty the battery therefore it might be half 787 megawatt day. As they put charge at night time, still it is huge amount of energy and it cause sometimes transformer burst.
What we can do? Ban in import and catch up those bikes. Then we have to see the result otherwise give license to them and regulate that they must use 120 watt solar pv panel, energy star rated motor and high quality charger and batteries. But still it is problem for our energy crisis time.
3. Air condition: Now on days, we are used to use of these products. It is inductive load and consumed good amount of energy. Nobody cares to reduce the temp level or efficient products. Recently, at the same price, many manufacture offering 50% less power but same BTU because they are using DC motor. Therefore high tax, high electricity unit price where higher then 3-5 kilo residential load needed. But it may not be possible due to political and public emotion purpose. But still there are no substitutes to make energy expensive then people will careful to use of energy.
4. Lighting purpose: We came to new energy saving age and using cfl bulb or tube. It will save energy sure but it cause heavy damage in environmental. Every cfl contain mercury and emit UV. UV is harmful for our skin and mercury is highly radio active poison. When any bulb damage in our room, we have to keep vacant that room and open door, windows because of mercury vapor. After that we send it outside or sale. If it is goes to river, soil it will damage the water and its poison circle will start. It affect drinking water, fish and we take water or fish and cause cancer, unborn child defect, etc. Some tube light THD level also too high which decrease gird performance.
What we can do? Use LED light. It is environmental friendly, long life (50000 Hrs where cfl is 3000 to 5000 hrs), very less energy consume even one third comparing cfl. As it is still expensive, we can use certified cfl and rules and regulation for recycling cfl. Another thing is still now; customs do not have HS code or tax structure for led light, bulb or tube. Led light must have duty/ tax free access.
5. BTS for mobile operator: Bangladesh has rapidly expanding mobile uses and according to that base transmission station also need. Now, 25000 over BTS running and more 7000 or more coming within 2 years. For mobile company, energy unit rate must have different category (high). Every BTS they use 2 pc 1 ton air conditioner which run round the clock. Now, if we calculate everyday 18 hrs air condition running this means 32.4 kilo only air condition. 32.4 times 25000 = 810000 kilo everyday 810 megawatt everyday.
What is the solution: They have big investment and they can easily put solar / wind/ combined hybrid power generation system. If one BTS investment is near one core, they can easily put 5 to 10 % extra investment to do solar/wind/ hybrid power generation solution.
6. IPS: Most popular device in our urban area. Due to lack of electricity supply, these products become popular. But it is not efficiency products. As normal theory, when power convert, it cause some loss, main focus is minimizing the loss as much as possible. But our IPS, now making almost every technician in the every corner of the road. Therefore it design efficiency is very less. Then comes to parts, most of the parts are not standards because of cost minimizing. Transformer core, wire is very poor and it cause loss of current. If we calculate 20 % power waste in IPS, it is really significant amount where everyday we are using this product and use of this products also increasing.
What can do? Firstly, IPS must have some certificate/ compliance rules. Additionally, certain amount of load can put in solar pv. This will benefit supply side and demand side both.
Above all the circumstances, we find we must need energy efficient regularity authority and authority like energy star (who tested and give certificate for energy efficient products).